Minister for Trade and CompetitivenessMinister Assisting the Prime Minister on Asian Century PolicyMinister for Tertiary Education, Skills, Science and Research

The Hon Dr Craig Emerson MP

Malaysia-Australia Free Trade Agreement Signing Ceremony

22 May 2012

Malaysia-Australia Free Trade Agreement Signing Ceremony

Subjects: Malaysia-Australia Free Trade Agreement.

Mandarin Oriental Hotel, Kuala Lumpur

Transcript, E&OE

22 May 2012

MUSTAPA MOHAMED: OK, ready? So, ladies and gentlemen of the media, thank you for your support. I can see that there is a lot of media support for this programme. Indeed, it is a very historic occasion for both of us. For Craig, as he shared with you, this is the first FTA he's signed. For me, I've signed a few in the last three years but this is something very special because never before in our history have we been able to achieve this kind of success. On the first day of the agreement coming into force, all the goods from Malaysia can enter Australia duty free. And the major beneficiaries will be people in iron and steel, in plastics, in textiles, including in wood and furniture to name a few.

The duties on some of these products have been around five to ten per cent. You can imagine the substantial impact - the duty reduction, the duty exemption - would have on the exports of Malaysian products. This year, they are paying five to ten per cent. Next year, duties will be zero and there is a huge reduction from ten to zero and five to zero and this will benefit Malaysian exporters.

This is one example, but there are many others. This is a comprehensive agreement covering services, investments, equity conditions. We're very happy with this agreement and the Malaysian Cabinet would like to thank the Australian Government for its understanding and the goodwill shown throughout this negotiation. We would like to record our appreciation to our negotiators, Michael (Mugliston) and on our side is Jaya (sena Jayasiri). Michael and Jaya - these are the two gentlemen who have been working very hard in the last one year. The momentum picked up, after the meetings between our two Prime Ministers which was really a very historic meeting here in Kuala Lumpur and later on in Canberra. The direction came from the top. But without the support of Minister Craig, of course, this would not have taken the kind of direction that it has taken, which enabled us to conclude in good time.

This agreement was concluded, I mean we agreed on all the basic points, on 30th of March and then we went to Cabinet, and as I said, the Malaysian Cabinet welcomes this agreement. It is a very historic agreement for Malaysia.

Thank you. Minister Craig, let's say a few words and then we open the floor for Q&A.

CRAIG EMERSON: Thank you my friend. If I could build on Minister Mustapa's comments that this negotiation had been going on for quite a few years. It was when our two Prime Ministers got together in March of 2011 that they determined that we should do everything possible to complete the negotiations within one year. And I am delighted to say that Minister Mustapa and I did that, we did it on 30th of March 2012. When I advised our Prime Minister Gillard of our successful completion of negotiations, she said "That's fantastic!" and it is fantastic. That the two leaders of our countries had given their personal support for the successful completion of this negotiation was vitally important because it certainly does allow us to invoke them in seeking to bring an agreement to conclusion.

So I want to obviously thank our Prime Ministers, but personally thank my friend and colleague and counterpart, Minister Mustapa, because all the way through our collaboration on this agreement we've enjoyed a very good, frank and open relationship. I can disclose that the nature of the negotiations wasn't so much of the style of head-banging as joint problem-solving, understanding each other's issues, understanding each other's imperatives and seeking to accommodate them.

This agreement, too, would not have been possible without the championing of the business community – the Malaysia-Australia Business Council and the Australia-Malaysia Business Council. And I can't describe how important it is that we have business leaders behind us pushing us all the way and advocating on behalf of completing a "gold standard", comprehensive, truly liberalising free trade agreement. And that's what this is. It builds on the ASEAN-Australia-New Zealand Free Trade Agreement, which is recognised around the world as a very high-quality gold standard agreement. So, Minister, if that was a gold standard agreement, I guess we're sitting at platinum, above the gold standard because that's what we've achieved; a platinum agreement building on the gold standard agreement of the ASEAN-Australia-New Zealand Free Trade Agreement. I don't know if they're awarding platinum medals at the London Olympics but I think we've achieved it in trade liberalisation.

As Minister Mustapa has indicated, from the Malaysian side, Australian exporters of goods will have duty free access from the entry into force of more than 97 per cent of the goods that Australia currently exports to Malaysia and that will rise to 99 per cent from 2017. But in addition to that, as important as it is, this is truly liberalising in what is a growing and very important employer of people right through our region and that is the service industries, where the incentives are being created for Australians to support and invest in, and establish offices in all the professional services, whether it be in legal services, in accounting services, the whole range of services that are important to the development of our economies.

Minister, I am also very happy to have been able to respond to Malaysia's urgings in relations to scholarships. You yourself have fond memories of your time studying in Australia and my very firm view is that the best investment that we can make as Ministers and as Governments is an investment in our young people. They become ambassadors for Malaysia, ambassadors for Australia, right through their lives and we've gone some way in further strengthening that relationship by the announcement of more than 20 new scholarships to build on the ones that are already being provided. So, congratulations to you, thank you very much for the friendship and I will finish with this. This is a testament of the strength and the warmth of the relationship between Australia and Malaysia. We are great friends, our bonds have been established over many decades, in defence, in conflict and through that, in enduring friendship and warmth.

So thank you very much Minister, thank you to the Malaysian people for understanding the importance of opening up our markets to each other so that we can provide more jobs and better jobs to the people of our countries.

MUSTAPA: Thank you Dr Craig. I must say that the offer of scholarships is unprecedented. We have not signed any FTA agreement where the agreement is accompanied by good offer of scholarships. So I would like to thank, on behalf of young Malaysians, the Government of Australia for offering these scholarships. As I say, this is unprecedented and this is very historic. And there are many areas of collaboration. You witness the signing of the agreement between our two institutes, one in Malaysia and one in Australia, that's another major highlight.

So, it's not just about tariffs, it's not just about market access, it's also about cooperation and collaboration. I have been informed that our two respective bodies in Australia and Malaysia have identified 15 projects of collaboration in this year, 2012, in the area of technology enhancement and also human capital development; this is in the auto sector. So this is another example, one is scholarship, which is unprecedented; another is collaboration in auto sector, a sector which is very important to Malaysia in terms of upgrading our own capabilities. Thank you.

EMERSON: OK, questions?

QUESTION: Could you give us the potential size of trade volume from this FTA?

EMERSON: We haven't done an econometric analysis of this. I think the answer is fairly self-evident and that is we leave that to the business community. The business community responds to incentives and is grateful when unnecessary impediments are removed. And what this does is remove some impediments by lowering barriers to trade and investment, and it will be the business community, the dynamism, the entrepreneurial skill and flair of the business community that will answer that question for you. But because they have been such great champions all the way through, I know that the business community in both countries really values this agreement because it has achieved substantially what the business community has sought.

MUSTAPA: I think they are looking for some forecast.

EMERSON: Yeah I know.

MUSTAPA: There is no model.

EMERSON: Yeah.

QUESTION: Can I ask, according to the materials given to us, it says here, "Malaysia offers commitment in the following sector, namely education, telecommunication, financial. When will this actually come into force?

EMERSON: 1 January 2013 is the intended entry into force date. Obviously, we need to go through our own parliamentary processes. In Australia, we have a Joint Standing Committee on Treaties. That is a process to which we are committed. So, this agreement will then be subjected to that and then any necessary legislation put to the Parliament, with the view to starting on 1 January 2013.

MUSTAPA: We have a much simpler procedure. Once it goes to the Cabinet, that's it and we'll determine the date when it'll come to force and of course we agreed on the 1st of January. We finish all our legislative processes.

QUESTION: Dr Emerson, why is Australia only interested in two areas: private hospital services and also Malaysians' participation in providing traditional and complementary medicine services? Is there a demand for these services in Australia?

EMERSON: Well, yes, again this is a response very much to the urgings and representations of the business community of both our countries. I think it's a good model and that is that you can imagine governments negotiating these trade deals almost in a vacuum, anticipating what business people might want. Far better to actually have the business community coming to government and setting out its priorities so that we can concentrate very much on those priorities and that is what's reflected in the agreement.

QUESTION: Mr Craig, would you comment on, given the controversy in this country involving the Australian company Lynas, there's a lot of opposition to (inaudible). As Minister, what's your take on investment – cross-boundary investment – that can generate pollution?

EMERSON: Sure. I will start by this observation, that the Lynas project is not of itself covered by this trade deal. There was no proposal for the Lynas project or specific projects of that sort to be covered by a Free Trade Agreement. Lynas has been working with the Government of Malaysia on approval processes and on the completion of construction of the plant. I understand that there is a Parliamentary committee looking at the Lynas project. It is holding hearings and, as I'm advised, is likely to present its report to the Parliament in early June. On the basis of that report, the Government will consider the final details of the Lynas licence application. Minister Mustapa and I have raised and discussed the Lynas matter. That's the position where that project is at the moment. So I understand they have completed construction, there are a few more processes for the Malaysian Government to complete, and then it will make the final decision.

QUESTION: During the negotiations were concerns of Lynas, what has ensued, were they brought up at the table?

EMERSON: Not during the negotiations of a Free Trade Agreement between our two countries, because, as I indicated, a Free Trade Agreement doesn't usually focus on specific projects – it focuses on procedures and practices and the general effort of opening up each country's markets and that's what these agreements do. They don't actually conventionally list individual projects and that has not happened in this case for that reason. We have had prior discussions on the Lynas project, but not in the context of the negotiations on the Malaysia-Australia Free Trade Agreement.

OK – I think we're done!

MUSTAPA: One last one.

QUESTION: Sorry, can I just find out if… the FTA covers… it covers the auto sector – but does it make it cheaper or easier for Malaysian cars to be exported to Australia?

EMERSON: Yes, Malaysian cars would enjoy duty-free entry into Australia from 1 January 2013 or the entry into force of the Agreement. The collaboration with our Cooperative Research Centre will involve the two countries working on ensuring that we're producing the best quality cars in, what is frankly, a very tough international market. And I think that's again an indication of the economic integration of our two economies.

QUESTION: Could you kindly elaborate what does it mean by Malaysian participation in hospital support services in terms of equity, 100 per cent equity ownership of hospitals?

EMERSON: I don't have those particular details. We'll get you an answer to that at the end of the press conference if that's okay.

MUSTAPA: I think, if you'll agree, Dr Craig, we'll leave our Australia-Malaysia Business Council and Malaysia-Australia Business Council behind to tackle some business-related issues and our two chief negotiators, Michael and Jaya, can stay behind for the next 5-10 minutes while we enjoy lunch. If that's fine with you. (laughter)

EMERSON: We'll bring you some. (laughter)

MUSTAPA: So Michael (Halpin) and Larry (Gould) will stay behind, and Michael (Mugliston) and Jaya (siri), can you stay behind to handle some technical issues. Okay?